Monetarism (jan 1, 1970 – 23h 56min, jul 21, 2026 y)

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This is the economic theory that proposes that the controlling of a country’s money supply is the most effective way to encourage economic growth and limit unemployment and inflation. The control of the money supply is through the regulation of interest rates. Monetarism is closely associated with the economist, Milton Friedman, who explained that inflation was mainly caused by a surplus supply of money produced by central banks. He believed that when the money supply is directly proportional to consumer spending, and demand, and thus inflation. Similar to Adam Smith, Friedman and Friedrich Hayek advocated that the free market was the only way to equilibrate supply and demand in an economy while allowing individual freedom. Ultimately, Friedman’s monetarist ideas heavily influenced Great Britain, the United States, and other countries to shift back towards classical liberalism and away from the Keynesian economic principles of government intervention in response to the stagflation era of the early 1970s.

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